New Boundaries for Global Trade

Interview with Pascal Lamy, Director General, World Trade Organization, WTO. Confronting the difficulties of closing the Doha Round, the WTO is under pressure to find a way to rebound. Handling the ‘wheel’ is one thing, but for Pascal Lamy some mechanical work should be done on the ‘engine’ and the ‘accelerator pedal’. The WTO is getting closer to its second life, the after-Doha, if the ‘Members’ want it:

Imagine that your organization didn’t exist and you were asked to invent it. What would you do? How would it be fundamentally different from what exists? What would be the differences regarding mandate, resources and objectives?

You need to take into account that it was not long ago that the WTO did, in fact, not exist. We are quite a young organization having only come into business in 1995. Even the principle of global rules and a multilateral trading system dates back less than 70 years. Now consider why it was that this system and this organization were created: absent global rules, governments showed an unfortunate tendency to employ trade policies that were erratic, short-term oriented and driven by the political pressures of the time. Unpredictable and often hostile trade policies fanned commercial tensions that led, in turn, to a souring of foreign relations and quite often armed conflict. A system in which governments were required to implement transparent trade policies and were not permitted to discriminate against or among their trading partners was and is a good idea. The same is true for the creation of an organization charged with the responsibility for overseeing this system, for negotiating new rules to keep the system current and relevant, and for facilitating the resolution of the inevitable disputes that will arise between countries. So, the rationale for creating the trading system was sound. Does this mean that it is perfect? Certainly not. Most of our rules were agreed nearly 20 years ago and some date back to the creation of the General Agreement on Tariffs and Trade in 1947. These rules need updating to reflect the commercial and geo-political realities of the 21st century. But change does not come easily at the WTO. Decisions require a consensus of the 153 members and in the Doha Round those 153 must agree on all 20 areas of the negotiations if they are to harvest accord on even one of them. Some believe that the decision-making process needs to be re-considered to make it more flexible. The consensus system will, and should, remain. But perhaps we could create the conditions where groups of countries could move ahead in some areas while others opt to remain outside certain agreements. This has happened before and it may represent an opportunity to advance the trading system in the future. Greater attention needs to be paid, as well, to developing ways in which the organization can better address areas which, while not strictly trade related, are affected by trade in one fashion or another. I’m speaking here of climate change and other environmental matters, of social issues and of development.

The system is flexible enough to accommodate changes to trade regimes that are created in other fora in the international arena, but uncertainty persists. There have been no clashes between WTO rules and global rules for, say, the environment or social standards, but the public perception is often that the trading system could be more friendly in these areas. What is clear as well is that even though the WTO provides significant benefits for developing countries, we need to do a better job of ensuring that trade delivers for these members –which comprise more than two-thirds of our membership.